6355 Lecture Notes - Lecture 10: Aggregate Supply, Aggregate Demand, Interest Rate
20 Jun 2018
School
Department
Course
Professor
Week 10 – Macroeconomics and Economic Growth
Macroeconomics/Microeconomics
Microeconomics: the study of how households and firms make choices, how they interact in
markets, and how the government attempts to influence their choices.
Macroeconomics: the study of the national economy and the global economy as a whole
Macroeconomics
Main objects of explanation are:
- Aggregate output (growth over time)
- General level of process (inflation rate)
- Unemployment
- Interests rates
- Foreign exchange rates
- Balance of payments position
Gross Domestic Product (GDP)
-Measuring total production: GDP
- GDP: the market value of all final goods and services produced in a country during a
period of time
- GDP is measured using market values, not quantities
- GDP includes only the market value of final goods and services
-Final good or service: a new good or service which is the end product of the
production process that is purchased by the final user
-Intermediate good or service: a good or service that is an input into another good or
service
There are three ways of calculating GDP:
- The value added to approach
- The expenditure approach
- The income approach
Value Added Approach – GDP(P)
- Measures GDP by adding up the value added to products at each stage of their
production up until final consumption
-Value added equals the value of a firm’s production minus the value of the
intermediate goods it uses in production
- The value added of all industries in the economy gives GDP at market prices
Expenditure Approach (GDP [E])
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Microeconomics: the study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. Macroeconomics: the study of the national economy and the global economy as a whole. Gdp: the market value of all final goods and services produced in a country during a period of time. Gdp is measured using market values, not quantities. Gdp includes only the market value of final goods and services. Final good or service: a new good or service which is the end product of the production process that is purchased by the final user. Intermediate good or service: a good or service that is an input into another good or service. Measures gdp by adding up the value added to products at each stage of their production up until final consumption. Value added equals the value of a firm"s production minus the value of the intermediate goods it uses in production.
